Nikola founder resigns as chair amid allegations, SEC probe

[SAN FRANCISCO] Nikola, the embattled electric-vehicle startup that recently partnered General Motors (GM), said its founder stepped down as executive chairman effective immediately, removing a target of critics but clouding Nikola's future direction.

Trevor Milton, the social-media-savvy public face of the company he founded in 2014, was replaced by board member Stephen Girsky, whose title will be chairman, the company said in a statement late on Sunday.

The shakeup comes less than two weeks after the Phoenix-based company found itself in the crosshairs of a sceptical short seller that issued a highly critical report and whose claims are the subject of investigations by the US Securities and Exchange Commission (SEC) and, reportedly, the Department of Justice.

"Nikola is truly in my blood and always will be, and the focus should be on the company and its world-changing mission, not me," Mr Milton said in the statement. "So I made the difficult decision to approach the board and step aside."

The company has faced a turbulent period in the aftermath of a short-lived share rally following GM's surprise decision earlier this month to take a US$2 billion stake in Nikola and manufacture its new pickup truck. The Detroit-based carmaker got a cash-free 11 per cent equity position in its smaller partner in a bid to scale up and fast-track its own vehicle electrification efforts.

Mr Girsky, 58, is a former vice-chairman of GM who helped lead the carmaker out of bankruptcy.

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Nikola's shares have roller-coastered since the company went public on June 4 in a reverse merger, with Mr Girsky's blank-cheque company VectoIQ. At one point, they soared so high the startup's market value exceeded Ford Motor.

After the third day of trading, Mr Milton - who owns 35 per cent of the company, based on regulatory filings - was worth US$9 billion, making him the world's 188th richest person, according to the Bloomberg Billionaires Index. His net worth is now valued at US$4 billion.

The stock tumbled after short seller Hindenburg Research questioned the validity of Nikola's claims about its electric-vehicle technology, accusing Nikola of being "an intricate fraud built on dozens of lies". That drew the attention of financial regulators.

Mr Milton countered, calling Hindenburg's report a "hit job" in a tweet. He promised in a subsequent tweet to provide a detailed response to what he said were "one sided false claims". He also posted videos on Instagram, including one laden with expletives, dismissing Hindenburg's accusations.

While Nikola officially pushed back on Sept 14, some of the company's responses were more counterarguments than rebuttals.

On Sunday night, Milton said he planned to defend himself against "false allegations" in a statement he issued via Twitter.

The short seller's allegations aren't the first time questions have been raised about Nikola's claims. In June, Bloomberg reported that Mr Milton exaggerated the capabilities of the company's debut truck, Nikola One - purportedly a fuel-cell vehicle it never produced or brought to market. The company has denied making misleading statements.

CONFUSING MESSAGE

Mr Milton, like Tesla chief executive officer Elon Musk, has relied on social media to promote his company. In February, he introduced the Badger truck via a tweet, calling it "the most advanced electric & hydrogen pickup, designed to take down the Ford Raptor". On June 8 he tweeted that Nikola would start taking Badger reservations later in the month for "the most bad a- zero emission truck". Potential buyers paid deposits as high as US$5,000 - without even seeing a prototype of a vehicle that won't go on sale until 2022.

Investors have sometimes struggled to keep up with Mr Milton's messages, especially given the evolving list of projects Nikola is pursuing: battery-electric big rigs in Europe, fuel-cell-powered semis in the US, an electric pickup to be built by GM, becoming the preeminent supplier of hydrogen for fleets of vehicles and vague proposals to enter the market for high-performance sports cars.

"It's a bit confusing trying to follow Trevor on his various social-media outlets about the timing and cadence of communication of the different variables that you're talking about," Jeff Osborne, a Cowen & Co analyst, told executives during Nikola's first earnings call on Aug 4.

Nikola has had a co-development agreement with Germany's Robert Bosch since 2017 to develop key components such as fuel cells, motors and battery packs. It plans to build a battery electric semi-truck with CNH Industrial's Iveco at a facility in Ulm, Germany, by the end of next year. A fuel-cell semi truck is planned for 2023 which will be built at Nikola's factory in Coolidge, Arizona. GM will provide the fuel cells and battery packs.

BLOOMBERG